Dáil Éireann Debate, Wednesday - 19 January 2022
323. Deputy Ged Nash asked the Minister for Finance if he will request that the Revenue Commissioners undertake an examination of all companies that have benefitted from both the temporary wage subsidy scheme and the employment wage subsidy scheme to establish the extent to which relevant companies have paid out dividends to shareholders while benefitting from Covid-19 related wage subsidies; and if he will make a statement on the matter. [1195/22]
Amharc ar fhreagra324. Deputy Ged Nash asked the Minister for Finance if he plans to introduce new conditions on firms in relation to the use of and access to the employment wage subsidy scheme; his views on the fact that some companies have paid dividends to shareholders in the same financial year in which they have accessed State wage subsidies; and if he will make a statement on the matter. [1196/22]
Amharc ar fhreagraI propose to take Questions Nos. 323 and 324 together.
The Temporary Wage Subsidy Scheme (TWSS), which was provided for in section 28 of the Emergency Measures in the Public Interest (COVID-19) Act 2020, expired on 31 August 2020. The TWSS has been replaced by the Employment Wage Subsidy Scheme (EWSS) which is provided for in section 28B of the Emergency Measures in the Public Interest (COVID-19) Act 2020, as amended. The EWSS remains in operation until 30 April 2022.
The key eligibility criteria for the TWSS were that the business was suffering significant negative economic impact due to the pandemic, the employees were on the payroll at 29 February 2020, and the employer had fulfilled its PAYE reporting obligations for February 2020 before 1 April 2020, at the latest.
As regards eligibility for the EWSS, an employer must be able to demonstrate that its business has experienced a 30% reduction in turnover or orders between 1 January and 31 December 2021, by reference to the corresponding period in 2019, as a result of business disruption caused by the Covid-19 pandemic. Furthermore, the employer must have a tax clearance certificate to be eligible to join the EWSS and must continue to meet the requirements for tax clearance throughout the scheme. Where an eligible employer makes a payment of wages, within prescribed limits, to a qualifying employee during the scheme, the employer can claim an EWSS subsidy in respect of that employee.
As I have said previously, the primary purpose of the COVID wage subsidy schemes is to ensure, as much as possible, that employers keep employees in employment, thereby maintaining the employer/employee relationship, so that normal operations can quickly restart once the restrictions are lifted, rather than making them redundant and eligible for the Pandemic Unemployment Payment (PUP). These emergency support schemes were developed to deal with a situation where businesses were restricted from trading due to public health guidelines and not because of any economic or other trading conditions. It was considered that the best metric to determine the impact of the public health restrictions was a decline in turnover. At the outset of the restrictions nobody could anticipate how long or what impact the restrictions would have or how businesses or customers would react. Qualification for TWSS, and subsequently EWSS, was based on projections of the business.
The legislation enacted by the Oireachtas places the administration of the subsidy schemes under the care and management of Revenue, which includes ensuring that this very significant investment of public funds is properly allocated to eligible employers and businesses in line with the legislation enacted by the Oireachtas.
The eligibility criteria for the wage subsidy schemes, as provided for in legislation, do not include any conditions related to the payment by a company of a dividend or dividends to its shareholders. Thus, there is no impediment to employers paying dividends to its shareholders and this is a business decision for a company to take based on its financial circumstances.
The Office of the Revenue Commissioners is statutorily independent in how it conducts its activities so it would not be appropriate for me to request Revenue to conduct an examination of companies who have paid out dividends, while also receiving State supports. In any event, the fact that the legislation does not prohibit the practice would seem to make such an examination inappropriate.
As regards the Deputy’s second question on whether I propose to introduce new conditions on employers in relation to the use of and access to the EWSS, it should be noted that the overwhelming majority of companies that have participated in the wage subsidy schemes did so because they genuinely believed they would need support at that point based on the effect of the pandemic on their business. The experience both Revenue and I have had is that employers participating in the scheme are doing so in good faith.
I would also note that the schemes are characterised by a high degree of compliance by beneficiary firms. I set out details of the comprehensive compliance and assurance programmes carried out by Revenue in relation to the wage subsidy schemes separately in response to other questions raised by the Deputy.
I am advised that a number of companies have returned the TWSS or EWSS payments to Revenue either because they voluntarily withdrew from either scheme, found they were ineligible or their business performance was better than they expected when they entered the schemes. In that regard 860 employers have refunded €10.9 million in TWSS payments. In addition, 16 employers advised Revenue they were voluntarily removing themselves from the EWSS, 9 of whom fully withdrew and repaid nearly €21 million and 7 partially withdrew and repaid just over €4.5 million.
A total of 402 employers have repaid in full all subsidies claimed since the EWSS began, totalling approximately €52 million with an additional 3,331 making partial repayments totalling approximately €54 million.
To date, the EWSS has helped almost 52,000 employers to keep over 700,000 employees in employment since the scheme began in September 2020. It is highly likely that the vast majority of employers who have claimed COVID-19 wage supports have not had the wherewithal to pay dividends during the period of the pandemic. It is not readily apparent to me what impact an outright ban on dividend payments, or indeed a cap on such payments, would have had on the employment prospects of those 700,000 employees whose employers have been supported by EWSS payments.
However, I have said previously that I will keep this matter under review and assess if it would be appropriate to introduce any further conditionality into the scheme. This issue requires careful consideration to ensure that businesses that may well be profitable, but are far less profitable than they were in the past, are not precluded from participating in the scheme in the future. Such firms may still require this support to have a viable and successful future. It would be important that any changes are proportionate and would not undermine the overarching policy rationale underpinning the scheme, which is to maintain employment.
